China Construction Bank 2010 Q1 Operating Results Kicks Off to Good Start

 

On 29 April 2010, China Construction Bank Corporation (“CCB" or the “Bank”) announced its operating results for the first quarter of 2010. The Bank is off to a good start this quarter as it quickened the pace of changing its modes of development, while structural adjustments and strategic transformation were further driven. CCB maintained its stable yet brisk development of various lines of business.

Consolidation of good development momentum, sustained enhancement of overall profitability. As of 31 March 2010, the Bank realised profit before tax of RMB45.673 billion (unless otherwise specified, the data set forth herein are reported in accordance with International Financial Reporting Standards on a consolidated basis and are reckoned in RMB). As a result of a significant year-on-year increase in net fee and commission income and a substantial year-on-year decrease in asset impairment losses, net profit saw an increase of 33.92% over the same period last year to reach RMB35.189 billion. Annualised return on average assets and annualised return on average equity were respectively 1.43% and 24.51%, both maintained their leading positions in the industry. Net interest income achieved in this period was RMB57.18 billion, a growth of 12.40% over the same period last year. The combined effects of factors such as the structural optimisation of interest-earning assets, the inching upwards of market interest rates and the near conclusion of deposit and loan re-pricing, net interest margin was 2.39%, a rally from the fourth quarter of last year.

Asset size exceeded RMB10 trillion, with further improvements in credit structure. As of 31 March 2010, CCB’s total assets made a historical breakthrough of the RMB10 trillion mark to reach RMB10.124382 trillion, representing a growth of 5.21% from the end of last year. Total liabilities were RMB9.528683 trillion, a rise of 5.12% from the end of the previous year. In the first quarter, CCB implemented national macroeconomic policies to support the country’s economic development and improve people’s livelihood. The Bank’s extension of corporate loans remained stable; personal loans maintained a momentum of rapid growth and there was further optimisation in the Bank’s credit product structure. Net loans and advances to customers were RMB4.93278 trillion, a growth of 5.11% from the end of last year. In particular, growth accelerated in financing infrastructure, small enterprises, trade and supply chains and in personal first-hand housing loans, while growth in lending to real estate, government financing vehicles and industries with overcapacity slowed down. At the end of the quarter, the balance of loans to government financing vehicles was RMB2.8 billion less than at the beginning of the year.

Rapid growth of intermediary business, steady advancement of emerging business. In the first quarter, CCB’s net fee and commission income grew 42.42% compared to the same quarter in the previous year and reached RMB16.865 billion. Net fee and commission income as a share of operating income increased to 22.35%, which was 4.31 percentage points higher than the same period in the previous year. Rapid growth was achieved in key products such as settlement, financial management, agency sales and factoring, resulting in further rationalisation in income structure. Strong development momentum was maintained in the Bank’s investment banking business, while the volume of debt financing instruments underwritten by the Bank was the highest in the market and income from its financial management business doubled on the year. A number of performance indicators in the Bank’s credit card business maintained their leading positions in the industry and growth of 50% and 51% were achieved respectively in the amount of spending transactions and business income; merger and acquisition loans continued its leading position in terms of growth and quality in the industry for seeing no non-performing loans. Rapid development was witnessed in the series of “Livelihood Oriented” integrated financial service programmes, online banking loans and domestic factoring.

Persistent advancement of total risk management, continued improvement in asset quality. In the first quarter, CCB’s balance of non-performing loans and the non-performing loan ratio continued their concurrent declines, while the balance of non-performing loans decreased by RMB3.628 billion compared with the end of last year, in which non-performing loans in infrastructure related industries and real estate recorded a larger decrease. The non-performing loan ratio was only 1.35%, a drop of 0.15 percentage points from the end of last year. Asset impairment losses were RMB4.968 billion, a reduction of RMB4.027 billion compared to the same period last year. The NPL coverage ratio was 192.16%, an increase of 16.39 percentage points from the end of last year. Capital adequacy ratio and core capital adequacy ratio were 11.44% and 9.17% respectively.

 

Full support to the combat against the effects of drought and earthquake and to the disaster relief, active fulfilment of corporate social responsibility. In response to the severe drought in five south-western provinces in China, CCB donated an accumulated amount of RMB11.44 million in cash and more than 10 tons of water. In the meantime, CCB increased its credit support to the disaster-stricken areas. Disaster relief loans related to the production and transportation of materials, construction of water conservancy facilities, agricultural production and self-protection, transportation of water resources and life security in stricken areas were granted in a timely manner, to ensure the needs to combat the natural disaster in those areas were met.

 

On top of the full-scale sponsorship of needy high-school students, CCB donated RMB60 million to establish the “CCB Scholarships and Grants for College Students from Ethnic Minorities”. The programme has run in 16 provinces and autonomous regions including Inner Mongolia, Xinjiang, Tibet, Guangxi and Ningxia, where have a high concentration of ethnic minorities. It will provide subsidies to impoverished minority college students with high academic and ethical achievements, in the aforementioned areas for five consecutive years. Each student will be granted RMB3,000 per academic year. The programme subsidises a total of about 4,000 person times each year and will offer financial support to around 20,000 person times in total.

 

The recent violent earthquake in Yushu area, Qinghai Province has caught the full attention of all staff members throughout CCB. Their concern is expressed in the form of an immediate donation of RMB10.50 million in relief funds and RMB250,000 in relief materials. At this juncture, a staff donation campaign is still underway. Meanwhile, CCB has kick-started its emergency response mechanism at the first opportunity.  As usual, in dealing with special situations, the Bank adopts various measures, which in this case include the opening of "green credit channels", the waiving of handling fees for disaster fund remittance and the priority allocation of credit resources for reconstruction of infrastructure in power, communication and transportation, to provide quality and efficient financial services to the disaster-stricken areas.